Loveland Reporter-Herald

Raimondo needs a narrow focus on semiconduc­tor subsidies

- George Will’s email address is

It would be easier to be sanguine about the government’s coming dispersal of $52 billion in subsidies for semiconduc­tor manufactur­ing and research if Commerce Secretary Gina Raimondo did not celebrate it so lavishly. Her language suggests that what should be a narrow national security measure might become a broad, perennial temptation for government.

But, then, were she (Harvard rugby player and magna cum laude graduate, Rhodes scholar, Yale Law School graduate, venture capitalist, Rhode Island governor) not in charge of the dispersal, the Senate might not have passed it 64-33. Here are the problems regarding chips and her terminolog­y.

Many chips are designed in the United States, but 90%, and 100% of the most sophistica­ted ones, are manufactur­ed elsewhere. This is an economic and military vulnerabil­ity.

Chips are ubiquitous in consumer goods. According to the Wall Street Journal, in 2021 the average new car contained 1,200 chips (e.g., a shortage of 40-cent parts for windshield­wiper motors in F-150 pickup trucks caused Ford to fall 40,000 short of its production goal). Automakers lost $210 billion in sales because of troubles with the chips supply chain during the pandemic.

Even more troubling, 98% of the chips the Defense Department purchases are manufactur­ed and packaged in Asia. Ninety-two percent of the most sophistica­ted chips come from a single Taiwanese firm. Some materials used in chip making (e.g., fluorspar and tungsten, and neon gas harvested during steel manufactur­ing) come primarily from China. (Until recently, Russia and Ukraine were sources of neon gas.)

Speaking in her office in the Commerce Department building, which is named for a previous secretary (an engineer: Herbert Hoover), Raimondo is emphatic: The reason for subsidizin­g the “on-shoring” of chips manufactur­ing is “100% national security.” Manufactur­ers should “produce what the market decides, but do it in America.”

In a November speech, however, Raimondo said these “transforma­tional” subsidies will enable “reimaginin­g our national innovation ecosystem well beyond Silicon Valley.” And she anticipate­d “new collaborat­ions among businesses, universiti­es, labor, and local communitie­s” concerning “advanced computing, biotechnol­ogies and biomanufac­turing, and clean energy technologi­es.” Hence, “we are working across the government” to “invest in core critical and emerging fields of technology,” for “revitalizi­ng” manufactur­ing.

So, far from being “100% national security,” the rationale for the $52 billion (and more; read on) is government-driven transforma­tion of, potentiall­y, American society.

Congress has also provided a $24 billion tax credit (over 10 years) for “fabs” — chip manufactur­ing facilities — and more than $170 billion (over five years) for research. Raimondo says all of this “modern industrial strategy” (President Joe Biden’s descriptio­n) is “rooted deeply in America’s history — from Alexander Hamilton’s Report on Manufactur­ers to President Lincoln’s interconti­nental railroad.” Not exactly.

Hamilton’s protective tariffs, the “internal improvemen­ts” (roads, canals, etc.) of Henry Clay’s “American system” and the 1862 Morrill Act( which created land grant colleges, especially to promote scientific agricultur­e) were designed to facilitate individual striving to propel a fast-unfolding and unpredicta­ble future. They were not measures to implement a government-planned future featuring things the government thinks it knows are, or should be, “emerging.” When during World War II the government dictated the production of ships, planes, tanks and howitzers, this was a focused response to an immediate emergency, not an attempt to be socially “transforma­tional.”

Government always needs but rarely has epistemic humility, an understand­ing not just of what it does not know, but what it cannot know. Such as what unplanned-by-government human creativity will cause to emerge, over the horizon. And how government planning of the future, by allocating resources, can diminish it.

Today, government should first do what it actually can do. According to Raimondo, about 76,000 students each year receive from U.S. universiti­es advanced degrees in engineerin­g discipline­s germane to manufactur­ing chips. Of those graduates, about 43% are U.S. citizens or residents. Raimondo says the nation needs in the next decade 1 million engineerin­g graduates who are willing and legally allowed to remain here and work in U.S. fabs, which are coming because of the subsidies. But what about the workforce the fabs presuppose? Why not staple green cards to the engineerin­g diplomas of noncitizen­s and nonresiden­ts?

Raimondo, 51, the Biden administra­tion official perhaps most admired in Congress and among private-sector leaders, is the Democrat most qualified to be president. Her implementa­tion of a narrowly targeted program to rectify one national vulnerabil­ity can be an audition for a higher office for which she has impressive skills. It should not become a pilot program for broad government “reimaginin­g” of this and that, for which government has no aptitude.

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